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Suedzucker Q1 profit jumps, expects higher earnings for current year

An outside view of the headquarters of Suedzucker Group in Mannheim

HAMBURG (Reuters) -Europe's largest sugar producer Suedzucker posted a sharp surge in first-quarter operating profit on Thursday and confirmed increased earnings forecasts for its new fiscal year, despite the impact of the Ukraine war.

Suedzucker said in a statement operating profits in the first quarter of its new 2022/23 year that started on March 1 rose to 163 million euros ($166.23 million) from 49 million euros a year earlier.

The result was driven by good results from the sugar, starch, and fruit sectors and Suedzucker unit CropEnergies, which produces the green fuel bioethanol, and has benefited from higher energy prices, it said.

The company confirmed it expected full-year 2022/23 operating profits of 400 million to 500 million euros from 332 million euros in the previous year.

In Europe, higher prices for alternative crops are expected to lead to a further decline in sugar beet cultivation with a smaller harvest, it said.

"The EU is therefore expected to remain a net importer in the 2022/23 sugar marketing year, creating a positive market environment for Suedzucker that should allow the drastic increase in raw material and energy costs to be passed onto the market through significant sugar price increases starting in October 2022," it said.

It expects to transfer heavy recent cost increases, particularly in raw materials and energy, to new customer contracts.

"The underlying assumptions are still that the Ukraine war will be temporary and remain regionally contained, that despite the current developments physical supplies of energy and raw materials will be guaranteed and that the target and procurement markets will at least partly return to more normal conditions over the course of fiscal 2022/23," Suedzucker said.

The sugar sector made a quarterly 1 million euro operating profit, from a 25 million euro loss in the same year ago period.

($1 = 0.9806 euros)

(Reporting by Michael Hogan, Editing by Paul Carrel and Rashmi Aich)